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City of Mounds View, Minnesota • <br /> February 28, 1996 <br /> Page 5 <br /> • Leasing Options for the Mounds View School District <br /> A school district may lease for space that it needs. The problem for a school district arises in <br /> whether the money for leasing such space comes from its general funds or from a lease levy. <br /> Lease levies are approved by the Minnesota Department of Education on a case-by-case basis. <br /> In our investigation of lease levy approvals, the critical factor is whether the space is to be used <br /> for instructional or administrative purposes. If the space is primarily instructional, it will <br /> generally be approved for lease levy purposes. <br /> There is no "bright line" test that applies. For example: if a room will serve as a community <br /> resource room for meetings, training, etc., it may be approved as an instructional space. If it <br /> to be used exclusively as a board meeting room, it would probably be considered <br /> ;gym;nistrative. <br /> Community education purposes are usually given approval as part of a community education <br /> levy. Again, the purpose is the key. It must be instructional or programmatic in nature. <br /> Our initial discussions indicated that once preliminary plans are drawn and space use generally <br /> identified, a preliminary discussion and approval should be sought for a lease levy/community <br /> service levy from the Department of Education. <br /> It should be noted, also, that operation and maintenance of space is separated from the lease <br /> itself. The ongoing operation and maintenance expenses are excluded from any approved levy <br /> its. <br /> Lease Summary <br /> ;- <br /> Should the School District participate, the City would probably lease the facility from the HRA <br /> and sublease to the School District, or other non-profit/government agencies could lease in the <br /> same manner. The two units of government would budget for and pay the lease cost annually <br /> as an operating expense until the debt issued by the HRA was retired. <br /> Financing Analysis <br /> ie following are financing options available to the City, assuming a $1 million total project <br /> including acquisition and renovation. <br /> Average . TIC <br /> Type of Annual Interest Present <br /> Financing Cash Levy Rate Value Cost <br /> 100% TIF Cash $1,000,000 $ 0 — $1,000,000 <br /> Combined TIF/Lease: 211,000 84,212 5.06% 1,014,628 <br /> 20% TIF Cash <br /> 80% Annual Lease <br /> 100% Annual Lease --- 121,687 5.60 1,104,902 <br />